Harper’s: Baghdad Coup D’État For Big Oil

Harper’s Magazine investigation reveals how Big Oil vanquished the neo-cons – and OPEC is the winner.

“For months, the State Department officially denied the existence of this 323-page plan for Iraq’s oil”

Some conspiracy nuts believe the Bush Administration had a secret plan to control Iraq’s oil. In fact, there were TWO plans. In a joint investigation with BBC Television Newsnight, Harper’s Magazine has uncovered a hidden battle over Iraq’s oil. It began right after Mr. Bush took office – with a previously unreported plot to invade Iraq.

Within weeks of the first inaugural, prominent Iraqi expatriates — many with ties to U.S. industry — were invited to secret discussions directed by Pamela Quanrud, National Security Council, now at the State Department. “It quickly became an oil group,” one participant, Falah Aljibury. Aljibury is an advisor to Amerada Hess’ oil trading arm and Goldman Sachs.

“The petroleum industry, the chemical industry, the banking industry — they’d hoped that Iraq would go for a revolution like in the past and government was shut down for two or three days,” Aljibury told me. On this plan, Hussein would simply have been replaced by some former Baathist general.

However, by February 2003, a hundred-page blue-print for the occupied nation, favored by neo-cons, had been enshrined as official policy. “Moving the Iraqi Economy from Recovery to Sustainable Growth” generally embodied the principles for postwar Iraq favored by Deputy Defense Secretary Paul Wolfowitz and the Iran-Contra figure, now Deputy National Security Advisor, Elliott Abrams. The blue-print mapped out a radical makeover of Iraq as a free-market Xanadu including, on page 73, the sell-off of the nation’s crown jewels: “privatization [of] the oil and supporting industries.”

It was reasoned that if Iraq’s fields were broken up and sold off, competing operators would crank up production. This extra crude would flood world petroleum markets, OPEC would devolve into mass cheating and overproduction, oil prices would fall over a cliff, and Saudi Arabia, both economically and politically, would fall to its knees.

However, in plotting the destruction of OPEC, the neocons failed to predict the virulent resistance of insurgent forces: the U.S. oil industry itself. Rob McKee, a former executive vice-president of ConocoPhillips, designated by the Bush Administration to advise the Iraqi oil ministry, had little tolerance for the neocons’ threat to privatize the oil fields nor their obsession on ways to undermine OPEC. (In 2004, with oil approaching the $50 a barrel mark all year, the major U.S. oil companies posted record or near-record profits. ConocoPhillips this February reported a doubling of its quarterly profits.)

In November 2003, McKee quietly ordered up a new plan for Iraq’s oil. For months, the State Department officially denied the existence of this 323-page plan, but when I threatened legal action, I was able to obtain the multi-volume document describing seven possible models of oil production for Iraq, each one merely a different flavor of a single option: a state-owned oil company under which the state maintains official title to the reserves but operation and control are given to foreign oil companies.

According to Ed Morse, another Hess Oil advisor, the switch to an OPEC-friendly policy for Iraq was driven by Dick Cheney. “The VP’s office [has] not pursued a policy in Iraq that would lead to a rapid opening of the Iraqi energy sector that would put us on a track to say, “We’re going to put a squeeze on OPEC.”

Cheney, far from “putting the squeeze on OPEC,” has taken a defacto seat there, allowing the cartel to maintain its suffocating grip on the U.S. economy.

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Read the full story in the April edition of Harper’s Magazine, out this week: “OPEC ON THE MARCH: Why Iraq Still Sells Its Oil à la Cartel,” by Greg Palast.

Greg Palast is the author of the New York Times bestseller, “The Best Democracy Money Can Buy.” View his writings at www.GregPalast.com.

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